Horizontal analysis compares, between years, various line items in the income statement (e.g., cost of goods sold), balance sheet (e.g., inventory), or statement of cash flows (e.g., purchases of property, plant, and equipment). We calculate percentage changes.
Percentage change = (New - Old) ÷ (Old)
Linking to external data used in horizontal and vertical analyses videos
Vertical analysis is another method of descriptive analytics that can be used to examine financial performance over a period of time, explaining what happened this year as compared to the year before.